Attaching vehicle in travels - what will be the tax

I am planning to buy a car with my funds + bank loan and attach to a reputed travels. I will get a constant income month on month through which i will repay my EMI and get extra income. should i need to open a current account? do i have to open company and register ? what will be the tax i have to pay. I am a salaried professional already paying tax. will i be able to do this as a side business ?

Asked 1 year ago in Income Tax from chennai, Tamil Nadu

Income from business will have to be separately considered under the head Income from Business and Profession. Tax will be payable on income earned over and above the expenses incurred Applicability of service tax also needs to be looked into. Please contact +917418023344 for furthur details

First of all there is no need to open Current Account, you can have agreement in your personal name also. It is your decision to open a company or not, if not necessary dont open.
The travel agency will deduct TDS 1% from the payment they pay to you. You need to prepare an income statement showing your gross receipts and expenses incurred like Bank loan interest etc and then the balance need to declare.
The said income will be clubbed with your salary income you receive and then tax liability will be arrived at. You need to pay more tax when it is clubbed with your salary.
As per my view Instead you can buy a car and take loan on your wife name or any other family member name and rent it.

As per our understanding , you are willing to put your car on rent . If you put your car under rent without driver , then it may be covered under the transfer of right to use of the car and can be taxed under the state VAT . However if you give your car along with the driver then you retain the control on the car and it can be covered under the service tax .
Now when the service tax becomes applicable , the service tax can be paid by the service provider ( You ) or service receiver ( reputed travellers ) or both . The law says that if that when the service is provided or agreed to be provided by way of renting of motor vehicle to a person who is not in the similar line of business . Assuming that the reputed traveller is engaged in similar line of business ( renting of motor vehicle ) , the provision of reverse charge will not apply and you will be liable to collect and pay the service tax directly .
You can very well open the current account for this purpose . Regarding side business we can not comment as it is dependent upon various factors like your employment contract etc and hence our reply is confined to the tax matter only.

Yes you can do this side business. It is desirable to open current account to separate business income from other incomes. There is no need to register a company, but check from the travel about service tax liability whether the travel will pay service tax or otherwise. You have to determine net income from hiring service and add it to other income for the purpose of Income tax.

Disclaimer: The professional listings on TaxFull.com do not constitute a referral or endorsement by TaxFull.com. TaxFull.com is not an advertising service for tax professionals. TaxFull.com enables tax professionals to share tax-related information with users. Your access to and use of this site is subject to our Terms of Use.